When people come to me for help in how to invest and grow their money, I will usually ask them how much they are saving. When they say they are not saving much, I usually advise them to curtail luxury spending (such as eating out, designer clothes, $5 lattes, and yes, even their cell-phone and cable bills). These same people, many times, do not ask me about investing again, because it requires a sacrifice of lifestyle. Spending is directly correlated to their character. Read that last sentence twice.
This study shows that “low-income” people spend 40% on luxuries. If you rephrase that, they take 40% of their capital and fritter it away on temporary pleasures. When they are old, they will rely on the taxes of the working families of the future to fund their necessities in retirement.
If scraping by in the future is not your ideal retirement, start saving now and start investing slowly by putting a small monthly sum into an S&P 500 ETF. If you are in your 20s, you will most likely have almost $1M by retirement. If you are in your 40s, you’ll have around $200-300k ready to produce income for you in your retirement.
Emotions can drive spending on necessities.